DOE to phase out subsidies for off-grid areas

Filipino consumers’ pockets will be freed up of roughly 118 billion worth of annual power cost subsidies with the plan of the Department of Energy (DOE) to phase out the universal charge for missionary electrification (UCME) line item in the electric bills.

In an interview with reporters, Energy Undersecretary Felix William B. Fuentebella indicated that they are allotting a two-year timeframe on subsidy removal for the so-called rich off-grid areas like Palawan, Mindoro, Marinduque and Romblon.

“For the rich areas, the subsidy must be scrapped within two years – it will be at 50 percent phase out on the first year; and another 50 percent on the second year,” he said.

Fuentebella emphasized that the DOE is being guided by the Department of Finance and the Department of the Interior and Local Government on the classification of the rich local government units (LGUs) – including the island-provinces.

For the more marginal island-grids, the subsidy ditch will be for five years – at 20% subsidy reduction annually as billed by the distribution utilities.

“In the poorer areas, subsidies will be removed in five years at 20 percent each year – we have to make consideration because the LGUs are the ones having apprehensions,” the energy official said.

The UCME phase out, he said, shall be concretized in two Circulars that the DOE will be issuing and enforcing soon. The first one tackles the electrification plan for off-grid areas; while the second Circular fleshes out the terms of the proposed subsidy removal for the off-grid domains.

Fuentebella added the missionary electrification fund for the off-grid areas shall now be shifted as a government responsibility – instead of the consumers shouldering it in their electric bills.

“The UCME will be phased out, but if electrification fund is needed, it will no longer be charged to the consumers, it shall be charged to the government,” he explained.

Fuentebella further enthused “we are basically answering the question: Why are we charging inefficiencies to the consumers… it should be government, so we are addressing that.”

Relative to future off-grid electrification funding, he said this can be integrated in the budget that the energy department will be seeking under the General Appropriations Act (GAA) in the coming years. “The complete detailed computation will come within six months from the signing of the Circular,” Fuentebella stressed.